Massive RNG Supply Boost in California

October 8, 2019

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The California Department of Food and Agriculture (CDFA) recently awarded more than $67 million to 43 dairy digester projects across California, making significant strides toward achieving the state’s climate protection policy goals. The projects represent a total of over $300 million in economic development for the state, with over $234 million in private sector capital going to California’s Central Valley, home to one of the state’s most concentrated areas of disadvantaged communities. Part of California Climate Investments, the CDFA’s Dairy Digester Research and Development Program (DDRDP) provides financial assistance for the installation of methane-capturing in-state dairy digester projects. This new round of projects is expected to result in a greenhouse gas emission (GHG) reduction of more than 6.9 million metric tons (MTCO2e) over ten years of operation. These projects will produce and deliver renewable natural gas (RNG) to fleets and fueling stations throughout California, as well as inject locally produced RNG directly into both SoCalGas and PG&E’s existing pipelines for commercial and residential heat and power.

The announcement was made the same week that Governor Gavin Newsom signed a landmark executive order to leverage the state’s $700 billion pension investment portfolio and assets to advance California’s climate leadership. The same day, he signed SB 44 by Senator Nancy Skinner (D-Berkeley) into law, requiring the California Air Resources Board (CARB) to create a comprehensive plan for reducing greenhouse gas emissions from medium and heavy-duty vehicles—which account for 20% of the transportation sectors’ greenhouse gas emissions in California.

From 2014 to 2018, CDFA has funded a total of $114.25 million for dairy digester projects throughout California.

From 2014 to 2018, CDFA has funded a total of $114.25 million for dairy digester projects throughout California. With more than 30 methane digesters in operation and at least 50 more in development, California is leading the country in developing dairy digester projects and implementing the state-level policies driving them. These growing projects are successfully converting a previously untapped waste stream into both a valuable resource and an increasingly significant contributor to California’s renewable energy portfolio.

A Major Economic Driver–and a Major Climate Challenge

While California’s dairy industry, the nation’s largest, is a major economic driver for the state ($65 billion generated annually in dairy-related economic activity, supporting 180,000 in-state jobs), agriculture also contributes 7.9% of the state’s total annual GHG emissions.

In California, livestock and dairies alone represent 55% of the state’s methane emissions. Methane, a potent greenhouse gas, has more than 25 times the impact of carbon dioxide over a 100-year period. While methane’s lifetime in the atmosphere is shorter than carbon dioxide, it is also far more efficient at trapping heat, making methane a powerful contributing factor to climate change.

The methane produced by California’s dairy industry presents a remarkable renewable energy opportunity.

While the massive amounts of methane produced by California’s dairy industry present an immense challenge toward meeting statewide climate goals, it also presents a remarkable renewable energy opportunity for the state.

A Golden Opportunity for California and Its Fleet Operators

Dairy digesters capture methane emissions from decomposing manure, process, and convert it into pipeline quality RNG which can then be injected directly into California’s existing natural gas pipelines and used as an ultra-clean, low cost fuel for medium- and heavy-duty vehicles, as well as energy for homes and businesses. Dairy cows are incredibly prolific energy resources—one cow can produce enough transportation fuel to drive a car across the country and five cows can produce enough methane to power one home for an entire year. ​​

RNG utilizes methane captured from various organic sources, which would otherwise escape into the atmosphere.

RNG utilizes methane captured from various organic sources–including agriculture, dairies, landfills, and wastewater–which would otherwise escape into the atmosphere.  When sourced from dairy waste, RNG is considered a carbon-negative fuel, meaning RNG takes more carbon out of the environment than it produces.

When RNG is used as a transportation fuel, the co-benefits—the ability to remove greenhouse gases from the environment and reduce emissions from transportation fuel—become undeniable, especially in the emission-intensive medium- and heavy duty-sector.  Certified low-NOx natural gas trucks and buses are already 90% cleaner than the EPA’s current heavy-duty NOx emission standard. When fueled by RNG produced from dairy biogas, truck and bus operators can reduce GHG emissions by 80%.

In addition to the unmatched environmental benefits, RNG use can translate to revenue generation for fuel providers and fleets by leveraging California’s LCFS program. For every ton of CO2 equivalent avoided, LCFS creditors, such as RNG producers, receive credits tradeable on the LCFS market. These LCFS credits mean real cost savings and revenue generation potential for RNG providers and fleets utilizing RNG. It’s no wonder then, that over the last five years, RNG use as a transportation fuel has increased 577%.

Unmatched Climate Protection Opportunity

Dairy digesters are providing the largest greenhouse gas reduction of all investments in California’s climate action portfolio.

Dairy digesters are currently providing the largest greenhouse gas reduction of all investments in California’s climate action portfolio. The CDFA’s Dairy Digester Research and Development Program is ranked second of 60 climate programs in cost effectiveness, providing one ton of GHG reduction (CO2e) for every $9 invested by the state.

Although anaerobic digester projects have been converting waste to energy in California for decades, new, sophisticated projects are scaling—attracting new investors and proving to be a viable, cost-effective path forward to achieving California’s climate targets.

Earlier this year, a landmark dairy digester pipeline cluster project represented a major partnership between California dairy farmers, private industry, investors, and utilities. Biogas producer Calgren Dairy Fuels partnered with SoCalGas to develop a dairy digester cluster project that will collect biogas from 12 Tulare County dairies in California. Carbon-negative RNG will be injected directly into SoCalGas’ existing natural gas system and delivered to fueling stations, homes, and businesses. By the end of the year, the digester cluster will be on track to add nine additional dairies, making the project the largest dairy biogas operation in the US. The facility will capture methane from more than 75,000 cows, preventing nearly 130,000 metric tons of GHG emissions from entering the atmosphere each year.

This innovative project will enable SoCalGas to add up to 2.26 billion cubic feet of RNG each year to its pipeline system, enough to fuel more than 1,200 Class 8 heavy-duty trucks.

When compared to building electrification, another proposed pathway towards decarbonization, reducing the carbon content of California’s gas supply by supplementing RNG is more efficient and more cost effective. Replacing just 16-20% of traditional natural gas with RNG would reduce emissions the equivalent amount as electrifying all buildings in California—and would be two to three times more cost effective.

RNG – A Real Win for California

California continues to lead the nation in innovative on-farm methane reduction projects and sustainable agriculture management. As these projects scale, supported by state-wide policies, funding, and incentives, the industry is moving towards an economic and technical tipping point. The environmental, social, and economic benefits of sourcing RNG from in-state dairy digesters is becoming impossible to ignore.

The environmental, social, and economic benefits of sourcing RNG from in-state dairy digesters is becoming impossible to ignore.

At a state level, dairy projects like the ones recently funded by CDFA provide a sustainable, cost-effective, and viable path forward to reach California’s climate goals. Beyond utilizing a previously ignored and wasted resource, we are removing a powerful contributor to climate change from California’s atmosphere.

At a local level, these projects produce real economic opportunities for counties across California—boosting local tax revenue and creating lasting jobs in engineering, construction, and ongoing site operations.

RNG is a real, viable, and increasingly important part of California’s renewable energy portfolio.